Unless the context requires otherwise, references to the "Company," "Alfi,"
"we," "us" and "our" refer to Alfi, Inc., a Delaware corporation and its wholly
owned subsidiary, Alfi (N.I.), Ltd, formed in Belfast, Northern Ireland on
September 18, 2018. Unless otherwise noted, the share and per share information
in this Quarterly Report reflect a forward stock split of the Common Stock
privately held before the IPO at a ratio of 1.260023:1 effective on March 15,
2021.

Cautionary Statement Regarding Forward-Looking Statements



This Quarterly Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements generally relate to future events or our future
financial or operating performance. Forward-looking statements in this Quarterly
Report include statements regarding our business and technology development, our
strategy, future operations, anticipated financial position, estimated revenues
and losses, projected costs, prospects, plans and objectives of management. In
some cases, you can identify forward-looking statements because they contain
words such as "may," "should," "expects," "plans," "anticipates," "could,"
"intends," "target," "projects," "contemplates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these words or other
similar terms or expressions that concern our expectations, strategy, plans or
intentions. These forward-looking statements are not guarantees of future
performance; they reflect our current views with respect to future events and
are based on assumptions and are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from expectations or results
projected or implied by forward-looking statements.

We discuss many of these risks in other filings we make from time to time with
the SEC. Also, these forward-looking statements represent our estimates and
assumptions only as of the date of this Quarterly Report, which are inherently
subject to change and involve risks and uncertainties. Unless required by
federal securities laws, we assume no obligation to update any of these
forward-looking statements, or to update the reasons actual results could differ
materially from those anticipated, to reflect circumstances or events that occur
after the statements are made. Given these uncertainties, investors should not
place undue reliance on these forward-looking statements.

Investors should read this Quarterly Report, and the documents that we reference
in this Quarterly Report and have filed with the SEC, with the understanding
that our actual future results may be materially different from what we expect.
We qualify all of our forward-looking statements by these cautionary statements.

Overview


We seek to provide solutions that bring transparency and accountability to the
DOOH advertising marketplace.  Alfi uses artificial intelligence and big data
analytics to measure and disseminate audience presence and audience
demographics. Our computer vision technology is powered by proprietary
artificial intelligence, to determine the relevant demographic and geospecific
information of the audience in front of an Alfi-enabled device, such as a tablet
or kiosk.  Alfi can then deliver in real-time, the advertisements to that
particular viewer based on the viewer's demographic profile and/or geolocation.
 Alfi is designed to deliver the right marketing content, to the right person at
the right time in a responsible and ethical manner.  By delivering the
advertisements most relevant to the audience in front of the device, we connect
our advertising customers to the viewers they seek to target.  The result is
higher click through rates ("CTRs"), higher QR code scans and higher cost per
thousand rates ("CPMs").

Alfi seeks to solve the problems facing advertisers in the DOOH marketplace, as
its proprietary technology is designed to measure the audience when an
advertisement is displayed.  Our data rich reporting functionality is able to
inform the advertiser exactly when someone viewed each ad, as well as the
general demographic and geospecific characteristics of the viewing audience.
Alfi gives large and small businesses access to data-driven insights by
expanding their advertising capabilities, providing analytical sophistication
and delivering it all over multiple devices.  In addition to the traditional
Content Management System model that delivers adverts on a scheduled loop,
Alfi's technology is able to first analyze the audience and determine the most
relevant content to be displayed.

                                       15

Table of Contents

Alfi has created an enterprise grade, multimedia computer vision and machine
learning platform, capable of generating powerful advertising recommendations
and insights.  Multiple technologies work together with viewer privacy and
data-rich reporting as our primary objectives.  Alfi is able to use a facial
fingerprinting process to make demographic determinations.  As such, Alfi makes
no attempt to identify the individual in front of the screen.  Brand owners do
not need to know someone's name or invade their privacy to gain a deeper
understanding of the consumers who view their content.  By providing age, gender
and geolocation information, we believe brand owners should have the pertinent
data they need for meaningful insight.  From an analytics perspective, these
data points are intended to provide meaningful reporting instead of arbitrary
calculations based on estimates of ad engagement.

Alfi seeks to solve the problem of providing real time, accurate and rich
reporting on customer demographics, usage, interactivity and engagement while
never storing any personally identifiable information.  No viewer is ever
required, or requested by us, to enter any information about themselves on any
Alfi-enabled device.

Our initial focus is to place our Alfi-enabled devices in malls, airports rideshares and taxis. We also have begun offering our software solution to other DOOH media operators as a SaaS product.



Currently, we intend to charge customers solely based on a CPM, or ads
delivered, model. As we continue to prove Alfi in the marketplace, we expect to
charge customers based on a combination of CPM and CTR, and we expect we will
generate higher CPM rates than typical DOOH advertising platforms because of our
unique ability to only deliver ads to the customer's desired demographic.  In
addition, we also intend to provide the aggregated data to the brands so they
can make more informed advertising decisions.

Recent Developments

Warrants Exercised

Through March 31, 2022, warrant holders have exercised warrants to purchase 3,508,227 shares of Common Stock, providing Alfi with $16,034,189 in additional funding. As of March 31, 2022, there were warrants outstanding to purchase 969,385 shares of Common Stock.

Share Buy-Back

On June 23, 2021, Alfi announced a $2.0 million buy-back of its Common Stock.


 The buy-back was completed on July 9, 2021, with Alfi acquiring 137,650 shares
of Common Stock, for an aggregate price of $1,999,997, which are recorded as
treasury stock.

Changes in Management

As previously disclosed in the Company's filings with the SEC on October 22,
2021, the Board placed each of Paul Pereira, the Company's then President and
Chief Executive Officer, Dennis McIntosh, the Company's then Chief Financial
Officer and Treasurer, and Charles Pereira, the Company's then Chief Technology
Officer, on paid administrative leave and authorized an Investigation into
certain corporate transactions and other matters.

Also as previously disclosed, since placing the former executives on leave, the
Board has appointed: (i) James Lee as Chairman of the Board, replacing Mr. P.
Pereira in such role; (ii) new management personnel, including Peter Bordes as
Interim Chief Executive Officer, Louis Almerini as Interim Chief Financial
Officer and David Gardner as Chief Technology Officer; (iii) two new independent
directors to the Board, Allen Capsuto and Patrick Dolan; and (iv) Mr. Capsuto as
Chair of the Audit Committee and Mr. Dolan as a member of the Compensation
Committee and the Nominating and Corporate Governance Committee. Furthermore,
Mr. P. Pereira resigned as a director and from all positions he held with the
Company, Mr. McIntosh resigned from all positions he held with the Company, and
Mr. C. Pereira's employment with the Company was terminated.

Findings of the Investigation



The Investigation was conducted by a Special Committee. The Special Committee
retained outside legal counsel to assist in conducting the Investigation, and
such counsel retained additional advisors to provide forensic accounting
services, computer forensics and e-discovery services and other legal services.

                                       16

  Table of Contents

The Investigation found, among other things, that the Company's former senior
management caused the Company to enter into certain transactions and certain
agreements that were not approved by the Board, some of which included the
unauthorized issuance of shares of Common Stock, as follows:

The Company's former senior management caused the Company to purchase a

condominium in Miami Beach, Florida for a purchase price of approximately $1.1

? million without the Board's knowledge or approval. After the conclusion of the

Investigation, the Company sold the condominium for a price of $1.1 million on

April 15, 2022. Net proceeds after commissions and other expenses of the sale

were $990,000.

The Company's former senior management caused the Company to enter into an

agreement to sponsor a sports tournament for two years, for a $640,000

sponsorship fee, which the Company paid $320,000 in cash and $320,000 through

the issuance of 31,683 shares of Common Stock, without the Board's knowledge or

? approval. The Company has since obtained, in connection with the Company's

termination of the sponsorship agreement, the return of the 31,683 shares of

Common Stock. In addition, of the $320,000 in cash paid by the Company,

$295,000 was converted to a charitable contribution and the remaining $25,000


   was retained by the tournament organizer.


   The Company's former senior management caused the Company to enter into
   agreements with three vendors: (i) an investor relations firm to provide

investor relations and strategic consulting services and capital introductions;

? (ii) a consultant to provide financial and business advice; and (iii) a

start-up call center to provide customer service, sales and onboarding

services. Pursuant to these agreements, cash payments totaling approximately

$1,151,000 were made to these vendors and 300,000 shares of Common Stock were

issued to them without the Board's knowledge or approval.

These findings and other conduct by the Company's former senior management were previously disclosed in the Company's Current Report on Form 8-K filed on February 23, 2022.



The Investigation found the Company's internal control over financial reporting
to be deficient with respect to: (i) the disbursement process for third-party
vendors; (ii) the review and approval process for significant vendor contracts;
(iii) the use of Company credit cards by executives; (iv) the supervision and
approval of travel and entertainment expenses incurred by executives; (v) the
segregation of duties in connection with the payment and recording of invoices
and related bank reconciliations; (vi) the lack of a sufficient accounting
manual; and (vii) guidelines for the capitalization of fixed assets.

Credit and Security Agreement - Related Party


On April 12, 2022, the Company entered into a Credit and Security Agreement with
a related party lender. Pursuant to the agreement, the Company may borrow up to
$2,500,000 for up to one year. Through May 10, 2022, the lender has funded to
the Company $1,000,000 under the Credit Agreement. Prior to the maturity date,
the Company may borrow an additional $1.5 million under the Credit Agreement, in
the lender's sole discretion and subject to the Company requesting such
additional funds from the lender in accordance with the Credit Agreement, the
accuracy of the Company's representations in the Credit Agreement and related
documents, and that no default under the Credit Agreement has occurred and is
continuing.

The line of credit note matures on the earlier of (i) the date upon which the
Company consummates a debt or equity financing in an amount equal to or greater
than $4,000,000 or (ii) April 12, 2023. Borrowings under the Credit Agreement
are collateralized by a security interest in the Company's assets. Interest on
the unpaid principal amount accrues an annual rate of 6% through October 12,
2022 and an annual rate of 9% thereafter, except that in event of default
additional penalty interest at an annual rate of 3% will accrue on borrowings
through October 12, 2022. In connection with the Credit Agreement, the Company
issued a warrant to the lender pursuant to which the lender may purchase up to
1,250,000 shares of the Common Stock at a price of $1.51 per share. The warrant
can be exercised commencing on the three-month anniversary of the Credit
Agreement (i.e., on July 12, 2022) and expires on April 12, 2025.

Impact of COVID-19



On January 30, 2020, the World Health Organization ("WHO") announced a global
health emergency caused by a new strain of the coronavirus and advised of the
risks to the international community as the virus spread globally. In March
2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid
increase in exposure globally. The spread of COVID-19 coronavirus has caused
public health officials to recommend precautions to mitigate the spread of the
virus, especially as to travel and congregating in large numbers. In addition,
certain states and municipalities have enacted quarantining regulations which
severely limit the ability of people to move and travel.

                                       17

Table of Contents



COVID-19 has adversely affected the Company's financial condition and results of
operations. The impact of the COVID-19 outbreak on businesses and the economy in
the United States is expected to continue to be significant. The extent to which
the COVID-19 outbreak will continue to impact businesses and the economy is
highly uncertain. Accordingly, the Company cannot predict the extent to which
its financial condition and results of operation will be affected.

Results of Operations

Revenues

In general, Alfi earns revenue from rideshares or SaaS contracts with operating companies who maintain their own network and lease the Alfi platform.

Operating Expenses


Compensation and benefits expenses include compensation expenses related to our
executive, finance, and administrative personnel (including salaries,
commissions, bonuses, stock-based compensation, payroll taxes, and contract
labor costs). Other general and administrative expenses include communications
and technology costs, professional fees, selling and marketing fees, legal fees,
and rent and occupancy expense.

Three-Month Period Ended March 31, 2022, Compared to Three-Month Period Ended
March 31, 2021

                                               Three months      Three months
                                              ended Mar 31,     ended Mar 31,
                                                   2022              2021           $ Change       % Change
Revenues                                      $       63,303    $       17,450    $      45,853       262.8 %

Operating expenses
Compensation and benefits                          1,786,629           883,211          903,418       102.3 %
Other general and administrative                   3,154,981         1,251,859        1,903,122       152.0 %
Depreciation and amortization                        416,323           247,315          169,008        68.3 %
Total operating expenses                           5,357,933         2,382,385        2,975,548       124.9 %

Operating loss                                   (5,294,630)

(2,364,935) (2,929,695) 123.9 %



Other income (expense)
Other income                                           2,059            13,018         (10,959)       -84.2 %
Interest expense                                        (30)         (356,914)          356,884        -100 %
Total other income (expense)                           2,029

(343,896) 345,925 (100.6) %

Net loss before provision for income taxes (5,292,601) (2,708,831) (2,583,770) 95.4 % Provision for income taxes

                                 -                 -                -         N/M
Net loss                                      $  (5,292,601)    $  (2,708,831)    $ (2,583,770)        95.4 %


Revenues

For the three-month periods ended March 31, 2022, and 2021, net revenues were
$63,303 and $17,450, respectively. During the three-month period ended March 31,
2022, the Company earned revenues from customers for advertising delivered
through Alfi-owned devices. Revenue earned during the three-month period ended
March 31, 2021 was earned from a single customer.

Operating Expenses



For the three months ended March 31, 2022, and 2021, total operating expenses
were $5,357,933 and $2,382,385, respectively, an increase of $2,975,548.
Compensation and benefits expense increased as independent contractors became
full time employees effective March 1, 2021. Other general and administrative
expenses increased due to higher costs related to the Company's growth and
launch of its technology platform and the Company's May 2021 IPO. Legal and
professional fees increased due to additional fees related

                                       18

Table of Contents



to the Investigation, and data network charges and payments to drivers increased
due to significant year-over-year growth in the number of tablets in service.
Depreciation and amortization expense rose because the three months ended March
31, 2022 included depreciation expense for additional tablets purchased since
March 31, 2021.

Operating Loss

For the three months ended March 31, 2022, the operating loss increased from
$2,364,935 to $5,294,630, an increase of  $2,929,695 compared with the three
months ended March 31, 2021. The increase was primarily due to higher operating
expenses, as discussed above.

Other Income (Expense)


Interest expense was $30 and $356,914 for the three months ended March 31, 2022,
and 2021, respectively. The Company incurred interest expense during the three
months ended March 31, 2021, in connection with related party debt outstanding
prior to its IPO. The Company repaid all related party debt in May 2021 with a
portion of the cash proceeds from its IPO. No related party debt was outstanding
during the three months ended March 31, 2022.

Net Loss

For the three months ended March 31, 2022, the net loss increased from $2,708,831 to $5,292,601, an increase of $2,583,770 compared with the three months ended March 31, 2021. The increase was primarily due to higher operating expenses, as discussed above.

Liquidity and Capital Resources


As of the date of this Quarterly Report, the Company has not yet generated
substantial revenue from customers and business activity has mainly consisted of
cash outflows associated with its business development activities. These
conditions indicate that there is substantial doubt about the Company's ability
to continue as a going concern within one year from the issuance date of the
consolidated financial statements.

The Company's primary source of operating funds since inception through April
2021 was cash proceeds from the private placements of preferred equity and debt
securities. During 2021, the Company completed its IPO yielding net proceeds to
the Company of approximately $15.7 million from the sale of Common Stock and
warrants and approximately $16.0 million from the exercise of warrants. The
capital raised included funding for working capital to launch and expand
operations in accordance with its business model. On April 12, 2022, the Company
entered into a Credit and Security Agreement with a related party lender,
pursuant to which it may borrow up to $2,500,000 for up to one year. Through May
10, 2022, the lender has funded to the Company $1,000,000 under the Credit
Agreement.

The Company intends to raise additional capital through private placements of
debt and equity securities, but there can be no assurance that these funds will
be available on terms acceptable to the Company or will be sufficient to enable
the Company to fully complete its development activities or sustain operations.
If the Company is unable to raise sufficient additional funds, it will have to
develop and implement a plan to further extend payables, reduce overhead, or
scale back its current business plan until sufficient additional capital is
raised to support further operations. There is no assurance that such a plan
will be successful.

Off-Balance Sheet Arrangements


We did not have, during the period presented, and we do not currently have, any
relationships with any organizations or financial partnerships, such as
structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes.

Critical Accounting Policies and Significant Accounting Estimates



Our management's discussion and analysis of our financial condition and results
of operations are based on our financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities

                                       19

  Table of Contents

as of the date of the financial statements as well as the reported expenses during the reporting periods. Actual results may differ materially from these estimates.



We believe that the assumptions and estimates associated with the evaluation of
revenue recognition criteria, including the determination of revenue recognition
as net versus gross in our revenue arrangements, useful lives of long-lived
assets and stock-based compensation expense have the greatest potential impact
on our consolidated financial statements. Therefore, we consider these to be our
critical accounting policies and estimates. By their nature, estimates are
subject to an inherent degree of uncertainty. Actual results could differ
materially from these estimates.

Our significant accounting policies are more fully described in our consolidated financial statements (Note 2) included in this Quarterly Report.

Recently Issued Accounting Standards

Our analysis of recently issued accounting standards are more fully described in our consolidated financial statements (Note 2) included in this Quarterly Report.

© Edgar Online, source Glimpses